> the attached example with xinitials works as long as neither graphicx
> nor xcolor is used. Loading any of those packages (and possibly others)
> causes LaTeX to stop with an error, see below.
>> [LoadingMPStoPDFconverter(version2006.09.02).]
This seems to be an issue with supp-pdf.tex and supp-mis.tex.
At least it's running with: